Chapter 7 The International Legal Environment

1) Define
Common Law
Common law, derived from English law and found in England, the United States,
Canada, and other countries once under English influenceThe basis for common
law is tradition, past practices and legal precedents set by the courts through
interpretations of statures, legal legislation and past rulings. Common law seeks
interpretation through the past decisions of higher courts which interpret the
same statures or apply established and customary principles of law to a similar
set of facts. OWNERSHIP BY USE. (Page 201)
Code Law
Code law or Civil law derived from Roman law and found in Germany, Japan,
France, and in non-Islamic and non-Marxist countries in contrast is based on an
all-inclusive system of written rules (codes) of law. Under code law, the legal
system is generally divided into three separate codes. Commercial, civil and
criminal law. (Page 201)
Islamic Law
Islamic law, derived from the interpretation of the Koran and found in Pakistan,
Iran, Saudi Arabia, and other Islamic states. The basis for the Sariah (Islamic law)
is interpretation of the Koran. It encompasses religious duties and obligations, as
well as the secular aspect of law regulating human acts. Broadly speaking, Islamic
law defines a complete system that prescribes specific patterns of social and
economic behavior for all individuals. It includes issues such as property rights,
economic decision making and types of economic freedom. The overriding
objective of the Islamic system is social justice. (Page 202)
Marxist-socialist tenets
Under the premises that law, according to Marxist-socialist tenets, is strictly
subordinate to prevailing economic conditions, such fundamental propositions as
private ownership, contracts, due process and other legal mechanisms have had
to be developed. China and Russia, however in that each has taken a different
direction in its political economic growth. Russia is moving towards a democratic
system. China is attempting to activate a private sector within a multicomponent,
or mixed, economy in a socialist legal framework. Legal system centered on the
David Mhlecker

Student ID: 2016008340

October 5th 2016

economic, political and social policies of the state. Now more directly involved in
trade with non-Marxist countries. (Page 203)
Prior use Vs registration
In the United States, a common law country, ownership of IP rights is established
by prior use whoever can establish first use is typically considered the rightful
owner. In many code-law countries, however, ownership is established by
registration rather than by prior use the first to register a trademark or other
property right is considered the rightful owner. (Page 211)
Conciliation
Conciliation also known as mediation is a nonbinding agreement between parties
to resolve disputes by asking a third party to mediate differences. The function of
the mediator is to carefully listen to each party and to explore, clarify and discuss
the various practical options and possibilities for a solution with the intent that
the parties will agree on a solution. (Page 205)
Arbitration
If conciliation I not used or an agreement cant be reached, the next step is
arbitration. When all else fails, arbitration rather than litigation is the preferred
method for resolving international commercial disputes. The usual arbitration
procedure is for the parties involved to select a disinterested and informed party
or parties as referees to determine the merits of the case and make a judgment
that both parties agree to honor. (Page 205)
Litigation
Fear of creating a poor image and damaging public relations. Fear of unfair
treatment in a foreign court. Difficulty in collecting a judgment that may
otherwise have been collected in a mutually agreed settlement through
arbitration. The relatively high cost and time required when bringing legal action.
Loss of confidentiality. (Page 207)

Cyber squatters CSQ

CSQs buy and register descriptive nouns, geographic names, names of ethnic
groups and pharmaceutical substances and other similar descriptors and hold
them until they can be sold at an inflated price. (Page 215)

David Mhlecker

Student ID: 2016008340

October 5th 2016

2.

Discuss the state of international commercial law

Commercial law varies in the meaning between the common law (Commercial
disputes are subjected to the commercial- or civil law) and the code law (Under
code law, the legal system is generally divided into three separate codes.
Commercial, civil and criminal law). In my opinion there is no such thing as
international commercial law. The marketer has to deal with the commercial
law within a country (national) and has to subordinate to the law. In Europe (to
be precisely the European Union) will aim towards a unified commercial legal
system in the near future. (Page 200)
3.

Discuss the limitations of jurisdictional clauses in contracts.

When a jurisdictional clauses are presented in a contract, then its usual that they
honored by the courts. In some countries of the world it is not unusual that they
use the law of another country. (For example the European Union uses
jurisdictional clauses often) If the contractual events are not in effect, entered
into or executed within the state indicated, courts often disregard the
jurisdictional clauses and use the law of the own country. (Page 204)
4.
What is the objective theory of jurisdiction? How does it apply to a firm
doing business within a foreign country?
The objective theory of jurisdiction means, that an American is always a citizen of
the United States of America and is subjected to certain laws of the US. What is
illegal for an American business at home can also be illegal by U.S. law in foreign
jurisdictions for the firm, its subsidiaries and licensees of U.S. technology. When
an American citizen is working, traveling or living in a foreign country he or she is
subjected to the laws of this country and must obey them. That means that he or
she wont be punished or fined by law if it is the same time violating a domestic
U.S law. An U.S. enterprise has to consider several sets of laws. (i.e: Laws that
prohibit taking a bride, trading with the enemy, participating in a commercial
venture that negatively affects the United States of America economy,
participating in an unauthorized boycott such as the Arab boycott or any other
activity deemed to be against the best intrest of the US. Thus, at any given time a
U.S cititzen in a foreign country must look not only at the laws of the host country
but also at home law as well. (Page 223)

David Mhlecker

Student ID: 2016008340

October 5th 2016

5.
Discuss some of the reasons why it is probably best to seek an out-of-court
settlement in international commercial legal disputes rather than sue
There are many reasons why an enterprise should avoid court settlement of
international legal disputes. Going to court can be very expensive, frustrating and
they can be very time consuming due to the length of the lawsuit. Another
problem is that court cases are often publicized and they create a poor image and
the may damage the public relations. The settlement of dispute should follow four
steps: First, try to placate the injured party; if this doesnt work, conciliate,
arbitrate and finally litigate as a last resort. (Pages 204-208)

Sources
Cateora, Philip R.; Graham, John; Gilly Mary C.: International Marketing. 17th Revised edition.
New York: McGraw-Hill Education, 2015

David Mhlecker

Student ID: 2016008340

October 5th 2016